FirstGroup sticks by franchise date

The transport group that beat Sir Richard Branson's Virgin Rail to win the West Coast main line said it still expected to commence the franchise as scheduled despite a legal challenge.

FirstGroup was awarded the London to Scotland line by the Department for Transport (DfT) in August but Virgin Rail, a joint venture between Virgin and Stagecoach, is pursuing a challenge against the Government department.

FirstGroup, which runs First Great Western, TransPennine Express, First Capital Connect and Scotrail services, insisted the process had been "rigorous, detailed and fair" and was preparing to commence the handover on December 9.

The Aberdeen-based group, which is also the UK's biggest bus operator, said its rail division should report an 8.1% rise in like-for-like passenger revenues in the six months to September 30, down from the 8.4% growth experienced in the year to March.

The Government has delayed the final signing of the West Coast franchise contract due to the Virgin legal challenge. Sir Richard said the DfT did not follow its own rules in choosing FirstGroup rather than Virgin to run the new 13-year franchise and described the bidding process as "insane".

If the December takeover date is postponed, Transport Secretary Patrick McLoughlin has said there are procedures under which the DfT can operate the line in the public sector.

FirstGroup said its focus was "to ensure a smooth transition with continuity for staff and passengers alike and to deliver the many benefits and improvements we are offering without delay or disruption". It said all its rail franchises made a strong contribution to the rail division performance in the first half and pledged to remain focused on existing operations while developing the re-franchising programme.

The UK bus division is expected to deliver like-for-like passenger revenues growth of 2.5% in the period as challenging economic conditions continue to impact a number of its urban operations. However, during the period operations in the North of England and Scotland saw improved revenue growth.

As previously stated, FirstGroup expects UK bus operating margins to be around 8% in the full year, down from about 13% over the previous year after bearing the brunt of higher fuel costs.

FirstGroup chief executive Tim O'Toole said: "While there is significant work to do we are satisfied with the progress of the actions we have taken, though we remain mindful of the uncertain economic backdrop." Mr O'Toole said the board remained committed to its policy of dividend growth of 7% through to the end of the financial year 2012/13.